What’s a “viral loop?”
A term I’ve heard tossed around frequently in real life, but not in the blogosphere is the term “viral loop.” In fact, when googling it, I only saw one mention from Jia Shen (cofounder of RockYou, with $120M raised from Sequoia/Softbank), a very smart guy:

“The viral loop of people inviting each other to most social networks revolves around a user posting a widget to their page and having friends see their page.

The viral loops for Facebook (there are multiple) revolve around the news feed, the mini-feed and the invite request. Not around people coming to your page and interacting with it”

The steps a user goes through between entering the site to inviting the next set of new users

Simple enough? Well, because this core loop is repeated so many times over generations and generations of users, getting it right is incredibly important.

What’s an exampleNow let’s look at the viral classic, YouTube.

Again, the first encounter will probably be a video embedded in a page

If they like it, at the end of the video there’s an embed code that can be directly copied

Or, if they don’t want to embed or e-mail that video, other videos are recommended at the end of the process so that people can try those, and potentially embed a different one

… and so on.

Building your own viral loop
Ultimately, viral loops are like induction proofs in that you are jumping to a steady state situation in which your viral widgets/emails/messages are already out there, and you are optimizing some set of steps that users have to jump through. Then, once you get this right, then you are figuring out how to build “on-ramps” into your viral loop so that you bootstrap the entire process.
1. What’s your viral media?
The first (and last) choice you have to make is where people are going to receive an entryway into your viral loop. That might be e-mail, Facebook newsfeed, or blogs. The main factors to evaluate here are how difficult it is to integrate your entryway into their surface, and the response rate. The first factor, integration, is obviously important because a difficult integration means that perhaps fewer people will see your messages, or your messages will be filtered out altogether. The second factor, response rate, depends on how in-your-face your messages are (think Facebook invites versus e-mail spam), and how competitive the medium is. Obviously, viral marketing is about a compounding viral growth rate, and if your response rates are low, that will mean a huge difference in outcomes.
2. What’s your funnel design?
The next choice to make is the design of your viral “funnel.” First off, you want it to be short and as accessible as possible, since each page is a barrier you’re asking your users to leap over. Assume up to 80% to 90% attrition if you are asking them to register for a username/password, for example. So if you can make it very short – 2-3 pages at most – with progressive commitment of personal information, you’ll get further along in your design. And obviously, you’d ideally want to test for drop-off at each point, and optimize each step as if it were a landing page.

As stated above, viral growth rate is a compounding process, so the difference between a 80% dropoff and a 50% dropoff is huge spread over 1000s of viral loops.
3. What’s the viral hook in your product?
Another important choice is product, of course. At the end of the day, a bad product can adversely affect your viral experience, because a poor slideshow (or a widget that no one wants) will lead to very few embeds. So picking something that is either a deep personal expression (music, avatars, slideshows, celebrity posters, etc) or a communication mechanism (voice messages, text, etc) are all great for getting people to WANT to put the apps on their homepages.
4. What are the onramps to your viral loops?
Once you’re done with a very tight viral loop, then it’s time to create the on ramps. In this case, you are looking at places like your website homepage, paid advertising, traditional marketing campaigns, SEO, etc, to create places where users can discover your viral loop and begin the process

That’s it!
Those are the basics of thinking through a viral loop. The best way to understand them is to browse MySpace or get spammed by invites to social networks, and then break down exactly the “funnel” they are trying to put you through.

IMHO, Tagged.com has a fascinating one to analyze, since they won’t even let you use the website without entering in your e-mail addressbook information. Definitely check out that one. They definitely short circuit the entire viral process by turning it from:

Register -> Use Product -> Evaluate Product -> Tell friends

to:

Register -> Tell friends -> Use Product -> Evaluate Product

In their case, it’s really irrelevant how good the product is – instead, the focus is just on getting that viral loop to be fewer than 2 pages, and increasing your “branching factor” by using addressbooks rather than asking users to recall their friends’ emails. Anyway, check that out and also try out some of the other very successful social networks.

See you at the conference!

UPDATE: Removed Slide.com widget example now that the links no longer work :(